“All I need is more sales…”
At some point in the life of your business, you may find your organization with lower-than-desirable sales and yourself “stuck” with insufficient knowledge on how to turn up your sales pipeline in a systematic and predictable way.
In this issue of the BDC Spotlight, we’ll focus on the importance of QUANTIFICATION – the tracking and reporting of your Lead Generation and Lead Conversion systems. By mastering quantification, you’ll be able to turn your sales up – or down – predictably in response to the needs of your organization.
Top Selling Mistakes Business Owners Make
In the realm of sales, three of the greatest mistakes business owners make are:
- Selling to anybody. Many business owners find themselves selling to whoever will buy. Although this might remedy immediate cash flow issues, it can cripple your business in the long term. Accepting customers that are not part of your target market consumes your company’s time and resources and prevents you from being available to your ideal customers. Over time, the pattern can repeat itself and lead your business into a chaotic state of reduced focus, overwhelm and lack of profitability. The goal is to sharply focus your sales efforts on the “right” people or businesses – your target market.
- Generating leads through a “passive” referral process. If you’re receiving leads through referrals, the good news is, you’re doing well enough to inspire referrals. The bad news is, you have absolutely no control over your lead-generation process. You have no control over the timing and you have no control over the type of client that comes your way, leaving you feeling obliged to work with a referral who is not your ideal client and who is not a contributor to your company’s success. In an “active” referral process, you take control. You define for your referring clients the types of clients you want and then you give them a way of identifying prospects to refer.
- Lack of Quantification. How many responses do each of your Lead Generation activities generate monthly? How many leads do you need to generate to get a new client? What is your lead conversion ratio? How much does it cost to generate a qualified lead? How much does it cost to convert a qualified lead? These are critical questions.If you don’t know how well your sales efforts are working, you can’t possibly control your sales. If you can’t control your sales, you can’t control your operations – putting your employees at risk, for example, of operating in a “feast or famine” environment that alternately overworks and burns them out or makes them vulnerable to being laid off.If you can define, document and quantify your sales process, you’ll find it easier to identify what you need to innovate in order to achieve the goal you desire. In addition, it’s important to establish a baseline so you can measure the impact of your innovations.
A Systematic and Quantifiable Approach to Sales
A proven, reliable system for producing sales includes three elements and requires diligent tracking methods. The three elements are:
- Target market development
- Proactive lead generation
- Conversion of qualified leads
Target Market Development is very much the “research” or “strategic” end of the sales process. It requires you to answer the question, “Who is my ideal client?” The greater the effort put into your target market development the more it will impact the effectiveness and efficiency of your lead generation and lead conversion processes. A clear definition of your ideal client provides clarity of focus for your sales efforts. The intention is to “attract” the ideal prospects, the types of leads you want to attract. With high qualified leads, your sales team can be more efficient without wasting efforts sifting through unqualified prospects. For more information on target market development, please see the issue of the BDC Spotlight Increase Sales with Less Effort.
Proactive Lead Generation is the first “tactical” stage of the sales process after the target market development research is completed. It consists of putting the targeted message into the best marketing or advertising channel and tracking the results. To determine which channel to use, look at your target market. If it consists of consumers of a specific age bracket, the “over seventy crowd”, for example, odds are your target customers aren’t using Google to find your product or service. They might be looking for recommendations from their doctor or chiropractor, so in this case you’d focus on building strategic alliances with members of the health and medical community to increase business. Although the seventy-something crowd might be your “end” customers, you would also treat doctors and chiropractors as customers of your organization.
The tracking and quantification process is simple if you’re doing things systematically and consistently. In the example above, you’ll discover that the average strategic alliance recommends “x” number of qualified prospects. And the cost to maintain these relationships is “$y”.
Conversion of Qualified Leads is the second “tactical” stage of the sales process. At some point in your sales process a qualified lead becomes a true “prospect.” If you’ve done your target market development and lead generation well, by the time a prospect meets with a salesperson, he or she has made the subconscious decision to buy. At this point, it’s your salesperson’s job to give your prospect the conscious justification to buy from you and not from your competition. To do this well, you need to know what it was that motivated them to contact you and then to re-state that in the sales conversion presentation. We also address this issue – what motivates your customers to buy, in the BDC Spotlight Increase Sales with Less Effort mentioned above.
As you start tracking your sales efforts, be sure to track Lead Generation/Advertising efforts separately from the Lead Conversion/Sales efforts. Breaking down your tracking efforts will enable you to focus on and fix the true source of your sales breakdown.
The Three-part Plan in Action
To give you an example of how this system works, imagine you are the owner of a San Francisco-based PR firm who wants to increase revenues. You’ve completed your target market development exercise and determined that your ideal client is the owner of a company with annual revenues ranging from $1,000,000 to $25,000,000 and 5 to 25 employees.
In doing your research, you’ve found that your target client uses Google as their search engine of preference. Google Adwords becomes your lead generation “channel” and the targeted message is the advertisement a prospect reads when they “Google” the keywords you have chosen as well as the landing page you take them to when they click on your ad. You attract a number of leads that call in to your company to sign up for a free “PR 101” webinar. The people who take these calls qualify the leads and register those to an on-line webinar who fit your ideal client profile.
As you conduct the Google campaign and the on-line webinar over time, you develop statistics. Let’s say your monthly costs for the Adwords campaign is $2,000. The campaign generates 400 leads, of which 100 are qualified. Then, perhaps 45 of the qualified leads attend your webinar and the webinar turns 15 of those who attend into paying clients.
In this example, a qualified lead costs $2,000/45 leads or approximately $44. The Lead Conversion ratio is 45/15 or 3 to 1. The cost of generating a new client is $44 x 3 = $132. If you invested $2,000 in the Adwords campaign and $1,500 in lead qualification and salesperson resources that delivered 15 paying clients who paid approximately $10,000 each, you would have executed a campaign that delivered $150,000 on your $3,500 investment. As a result of paying “attention” to the process of generating sales your business has created the following valuable assets:
- A replicable process that produces consistent results
- A documented Lead Generation system with a quantified baseline
- A documented Lead Conversion system with a quantified baseline
- A sales system your business is in control of – one you can turn up to increase leads and sales or one you can slow down if things are getting too chaotic. And, now that the process is documented, it becomes one that you can fine-tune to get even better results.Having this type of system in place gives you control over your pipeline and lets you turn sales on and off, transforming the plea for “more sales” into a reliable and predictable way to increase (or decrease) sales in line with the needs of your organization.